In today’s business world, will an MBA take your career to the next level? Yes, and here’s why it’s worth the effort and expense. By Narelle Hooper.
Australians view formal management education with an almost unhealthy scepticism. MBA, according to this school of thought, stands for Master of Bugger All and a Mega Big Attitude, while slogging for hours with a group of strangers on some obscure project can lead to a Marriage Break Away.
But as the business world shifts to digital warp speed, global competition gets tougher and the expectation to get agile or automated increases, will a Master of Business Administration help graduates get ahead? With the pressure on all of us to lift our game, will this traditional business toolkit provide a skill set that will keep us in work, boost our bank account and our resilience? And if so, when outlaying a sum roughly equivalent to a minor home renovation, what kind of return on investment (ROI) is it reasonable to expect for the time, energy and money spent?
Kyle Loades, president and chairman of motoring and services group NRMA, says that when it comes to ROI, we should be flipping the question. “What’s the cost of not doing an MBA; what’s the cost of not doing some further study?” he asks. A business entrepreneur who says he didn’t excel at high school, Loades completed his MBA at NSW’s University of Newcastle in 2015. He found it a great experience and hugely beneficial after a number of years in business.
“I’m a real believer that education is essential to ensuring you always remain in employment. You need to continually learn; you’re never too old to learn. The world is changing and education is insurance for your career, with every business potentially going through disruption.”
Associate Professor James Hutchin, Executive MBA program director at the University of Technology Sydney, says that in today’s business world you’re going to be either the disrupter or the disrupted. “In a prior world, you might have gone to bed at night wondering who was goingto take your market share. Now you go to bed wondering which innovator is going to take out your industry.”
In his final strategic management project for his MBA, Loades focused on Fairfax Media, publisher of The Sydney Morning Herald, The Age and The Australian Financial Review. The project was relevant because the NRMA is experiencing its own shake-up as technology transforms the operating environment. “Almost every industry is going to go through what has happened in the media so there are some good lessons if you take the time to observe,” he says, adding that the definition of stupidity is to keep doing the same thing when the world is changing.
The compelling new Study of Australian Leadership – the first of its kind in two decades – reveals managers and organisations are ill prepared for this challenging world. Many aren’t getting the leadership and management basics right. The survey of 8000 managers across more than 2700 organisations by Melbourne’s Centre for Workplace Leadership found that the higher qualified the leader, the better the organisation’s performance. Yet one in four senior leaders had no qualification beyond high school.
Now more than ever, organisations need a learning and adaptive mindset, says Preeti Bajaj, vice-president of strategy and transformation at Schneider Electric Australia. Bajaj says Australian management tends to be overweight in technical, experiential training. “And we have a tendency to hire for experience, not for an ability to think or have a ‘growth’ or learning mindset,” she says.
Bajaj, who has an MBA from Victoria’s Swinburne University of Technology, says the degree is a generalist qualification that trains you to think across multiple business dimensions and provides a transferable skill set. But, she argues, “we need to challenge the content schools are teaching and ensure that executive teams contain a mix of people and perspectives.
The reimagining of business education for the future is a live debate. John Toohey, co-founder of AdjunctFinder.com and a former business-school head at Victoria’s RMIT University, says innovation in this space tends to be slow. He believes, at the very least, schools should be incorporating the latest neuroscience and integrating ethics and entrepreneurship.
What are the benefits?
The news from those who’ve been through the MBA study mill is positive – and not just because they have Stockholm syndrome. A 2016 global Alumni Perspectives Survey of postgraduate business program alumni found high levels of personal, professional and financial satisfaction and employment; 92 per cent were employed and 93 per cent said they would repeat the experience if given the choice.
The study, by the Graduate Management Admission Council (GMAC), gauged the views of 14,279 graduates from more than 275 programs at 70 universities around the world, including Australia, Asia, the United States and Europe. It found robust alumni employment rates, high job satisfaction and strong cumulative-earnings growth 20 years after graduation. Graduates reported high levels of satisfaction on three measures: financial return, personal development and the acquisition of knowledge and skills. (There was little difference in employment rates and levels of satisfaction between male and female graduates.)
Among the benefits, MBA graduates (who studied full-time and part-time) said they developed good analytical skills, were better prepared for leadership positions and found opportunities to fast-track career advancement. Those who had a master’s degree in accounting, finance and management also reported substantial benefits. Overall, the MBA graduates were most likely to find the experience rewarding and recommend it to others.
According to the GMAC study, MBA graduates also recouped their investment more quickly by earning higher salaries. Graduates of full-time one-year MBAs, along with part-time, online and Executive MBAs, paid for their course in two-and-a-half years on average. Full-time two-year MBA graduates took three-and-a-half years.
While personal development, new skills and a salary boost were the main reasons graduates undertook their courses, there was high satisfaction with the boost in self-confidence and the expansion of personal networks.
Dr Nigel Finch, a corporate adviser and company director who has an MBA and a PhD, and who has taught MBA students, says he started two businesses with people he met during his MBA program. “Look around the auditorium and at the students. The value of an MBA is in the network. Your $50,000 is about building that network and the by-product is that you get good learning.”
Engineer Shalendra Ranasinghe, a commercial general manager at Roads and Maritime Services in Sydney, corroborates the network effect. She recently finished an Executive MBA at the University of NSW’s Australian Graduate School of Management (AGSM). The experience has given her an edge and the capacity to get across detail, while she and her former study buddies stay in touch as part of an active WhatsApp group.
“The best thing about my MBA was meeting other people who don’t think like me, who come from different backgrounds,” she says. “I’ve been in a lot of companies where MBAs are pooh-poohed. The people who have them tend to seek new ways of thinking and ask ‘why’ rather than accept the established regime.”
She recalls a senior colleague scoffing at her choice. “Don’t tell me you’re doing an MBA – what a waste. I thought you were smart,” said the executive.
“And I said, ‘I am. That’s why I’m doing it.’”
The ABC of the MBA
The MBA has enjoyed enduring prestige – while also attracting criticism – since first being offered at Harvard Business School in 1908. The master’s degree is a toolkit that covers accounting, financial analysis, statistics, economics, organisational behaviour, marketing and competitive environment analysis – theoretically, everything you need to run a business.
Australia has more than 40 different MBA programs, which can cost anything from $22,000 to almost $100,000 at an elite university with all the accreditations and a PhD-qualified faculty. You can learn via your laptop, without class time or exams, through the increasingly popular online MBAs; tough it out with a cohort of study buddies and PhD-qualified experts over a couple of years; or pay the big bucks to study at elite institutions around the globe such as INSEAD, Tuck, London Business School, Harvard, Stanford, Wharton, Booth, Columbia and MIT Sloan.
And with a couple of generations of managers strong on experience but lacking the formal qualifications to get ahead, according to industry research and Get Qualified Australia (GQA), demand is growing for pathways that give recognition of prior learning. GQA, a specialist in this area, has seen interest surge in MBAs. But students cite time and cost as the biggest barriers to study, says the company.
GQA has partnered with the Australian Institute of Management to help senior professionals get recognition for their skills and knowledge so they can undertake an accelerated MBA. GQA claims this can halve the time, cost and effort.
One-year MBA programs are becoming increasingly popular and they don’t necessarily mean you skimp on quality. This year, French school INSEAD, well regarded for its “transformational” MBA, topped the Financial Times’ global rankings with its one-year course, pipping the two-year degrees at London Business School, Harvard, Wharton and Stanford. Programs are ranked on measures including salary growth, career progress, value for money, research, faculty and student diversity and alumni recommendation.
In a sign of the times, seven Chinese MBA programs featured on the Financial Times list. And how did Australia fare? The Melbourne Business School, AGSM and Macquarie Graduate School of Management all made the cut, the latter making big strides in gender balance through its Women in MBA corporate partnerships. Bloomberg, Forbes and The Economist also publish lists, while the Melbourne Business School and University of Queensland Business School top Boss magazine’s biennial rankings. Rankings are a cat-and-mouse game, though, and business schools dislike them as much as they use them. In the US, the University of Washington’s Foster School of Business has just released a DIY ranking that lets students determine the measures that matter.
INSEAD’s dean, Professor Ilian Mihov, told the FT earlier this year that a top business school has five characteristics: it promotes diversity, has a global perspective, displays entrepreneurship, creates a transformational experience and teaches problem-solving and analytical skills. In a world prone to fads, he says, “problem-solving skills will still be in fashion 30 years from now”. ￼
How to take a short cut
With demand for education increasing but attention spans decreasing and not everyone keen to sacrifice years of full- or part-time study to expand their brain, there’s a call for short cuts.
This year, the University of Technology Sydney (UTS) launched a one-year MBA in Entrepreneurship, which includes certificates in venture funding, commercialisation and entrepreneurship. “We’re trying to teach those agility skills,” says Associate Professor James Hutchin from UTS. “Our approach is to make the teaching as experiential as possible.”
The aim is for students to go in with an idea, learn business foundations and use experiential learning to apply the theory. By the time they graduate, they should have a business plan for their idea.
As for cost, an investment in education might be timely ahead of home improvements, says Hutchin. “I don’t think a bubble in the education space for entrepreneurship is coming any time soon.”
Choose and MBA
Look for courses with a strong industry focus taught by people who have current business experience.
- Note the experience and calibre of fellow students and ask colleagues for course recommendations.
- Seek out a business school where you are tested in a peer group, there is strong industry crossover and your learning and ability to apply it is examined.
- Be prepared for sceptics who won’t consider an MBA valuable – know why you are making the investment.
- Consider a hybrid degree or a master’s specialty that straddles business skills and an area of specialisation.